Q1 2021 Q2 Holdings Inc Earnings Call
Greater today.
At this time I would like to welcome everyone to the Q2 Holdings first quarter 2021 financial results conference call on.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
Yeah.
Thank you I'd now like to begin the call.
And turn it over to Josh Yankovich.
Investor Relations Sir Please go ahead.
Thank you operator, good morning, everyone and thank you for joining us for our first quarter of 2021 conference call with me on the call today does not flake, our CEO and David <unk> our CFO.
This call will contain forward looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of Q2 holdings.
Actual results may differ materially from those contemplated by these forward looking statements and we can give no assurance that such expectations or any of our forward looking statements prove to be correct.
The full year of 2021 and.
In the first quarter, we generated non-GAAP revenue of of $117 million up 25% year over year and 7% sequentially. We added approximately 600000 users in the first quarter of year over year increase of 19% that brings us to more than $18 3 million total registered users on our did.
<unk> banking platform.
The first quarter wasn't encouraging start to the year with key success stories across the business on the sales side, we saw an improvement of net new decision, making activity during the quarter along with the continued expansion success with existing clients.
I will discuss the number of key wins later in the call. We also had a major banking as of service client launch, which I'll expand on in a moment and we saw yet another wave of record digital engagement enhanced by the latest round of stimulus payments in January.
Our technology combined with the preparation of execution of our team puts us on a great position to handle the increased volume as well as the continued growth in digital engagement, we expect to see moving forward.
I will turn to sales highlights in the first quarter, we had broad based sales success generating more net new bookings than any single quarter in 2020, which I believe indication of improving buying environment. We've had a number of of noteworthy net new of it and expansion wins in the quarter, including several enterprise and tier one wins across the portfolio.
I was particularly impressed with the breath of deals we side, which I believe demonstrates that the market is responding favorably to a digital transformation story.
I'll start with the enterprise customer segment, where we continue to see traction with a loan pricing data and sales coaching solutions, we had two such wins in the quarter with the top 25 and top 50 bank in the United States. The top 25 bank work with us to develop a new loan pricing module inside of the depth and flexibility.
Guilty of our loan pricing solutions as key drivers of their decision the partner with us.
The top 50 Bank provides a great example of our land and expand strategy coming to bear the.
Think first became a customer in 2019, when they purchased our corporate banking suite in.
In 2020, they added our treasury on boarding solution and in the first quarter of 2021, they purchased a loan pricing data in sales coaching solutions. This bank aims to grow the commercial portfolio aggressively.
Two other aspects of the portfolio over time. Additionally.
Additionally, we had two tier one banks selected our digital acquisition and Onboarding solutions, one for digital account opening and one for treasury on boarding this end to end digital acquisition and on boarding suite, which includes account opening treasury on boarding and now clicks, which solve for a key aspect of the overall customer lifecycle is becoming a more.
Common requirement in digital banking deals as these two deals demonstrate our digital acquisition and on boarding solutions are positioning us well for stand alone net new wins, giving us yet another avenue for of land and expand strategy.
We also had success in the tier two and three space highlighted by two significant credit Union wins, one for retail and small business and one for retail banking with the credit Union. The chose us for the strength of our end user experience.
Our digital banking success across customer segments supports my view, but as we've expanded into new products and markets. We continue to compete favorably in the digital banking space our focus on user experience our strong track record of innovation of product delivery and the breadth of problems. We can solve for our customers from retail to SMB to Corp.
And from deposits to lending are why we continue to win deals of this institutions of all sizes in this market.
Partially driven by the latest round of stimulus payments, we transacted more than $420 billion on the first quarter, representing 47% year over year growth.
And about as much as we of transacted in all of 2016.
Now that we're at quarter end of the new year, we continue to see the acceleration of digital engagement brought on by the pandemic, which we believe will under.
I'm proud of the way our teams of responded in the critical role they play in supporting our customers and the greatest time of need. This is a strong reminder of the talent processed and technological maturity required the operated scale on this industry with.
With the widespread technology refresh financial institutions are undergoing following the pandemic where our strongest.
Physician, yet the support our clients another theme where half we're hearing from customers coming out of 2020 is that they they and their account holders on innovation rapidly.
More than a year in the working remotely I'm incredibly proud of our performance and innovating in delivering for our customers and the time, we've been remote we've released substantial new innovation to our customers. We continue to shorten the time it takes the deliver incremental products to our customers and our delivering of record number of those enhancements as I've often said digital transformation is no longer option of.
<unk>, it's critical when you consider the increasing demand for stability security and innovation I believe one of highly differentiated position that balance is those needs for our customers.
On the subject of new products, we completed our acquisition of clicks, which in early April and I'm excited to share a bit about the rationale behind the transaction.
With the increasing focus on digital account opening in the past 12 months. We've continued to hear of theme from our customers. One of the most critical steps in Onboarding of new consumer is acquiring the direct deposit.
This is essential for driving deeper engagement revenue generating activity and cross sale opportunities, but the process remains manual and time consuming per account holders as a result less than half of all new checking accounts are fully activated within the first 90 days of opening the account.
Results for the first quarter of 2021, and conclude with updated guidance for the second quarter and full year.
Total non-GAAP revenue for the first quarter was $117 million, an increase of 25% year over year and up 7% sequentially.
Both the year over year and sequential increase in revenue was largely the result of growth in subscription revenue.
Driven by new customer go lives and organic user growth.
In addition, the year over year increase was due in part to go lives associated with cross sold products.
Transactional revenue represented 14% of total revenue for the quarter consistent with the prior year period and up from 13% of total revenue of the previous quarter.
The sequential increase in the mix of transactional revenue from the prior quarter was driven by day revenue, resulting from new customer go lives.
And of moderately increasing contribution of interchange revenue associated with the bass business.
Turning the backlog we ended the quarter with approximately $1 $3 billion in total backlog.
The 10% increase year over year, and a sequential increase of $2 million.
The year over year increase in backlog, which is largely the result of bookings added through renewal and expansion opportunities with our existing customers over the past 12 months.
As Matt mentioned in the first quarter, we saw an improvement in the net new buying environment.
As the total dollars added from new customer bookings was higher than in any quarter of 2020.
We also continued to see strong retention of.
Across all of our lines of business and continued success in cross sell opportunities.
As the buying environment continues to improve we expect that the contribution mix of net new bookings as the percentage of total bookings will be higher than what we observed last year.
2020 was an unusually strong year in terms of renewals.
While the macro backdrop, driven by the pandemic caused the slowdown of net new opportunities. It also allowed us to drive a record number of customer renewals.
As we believe existing customers clearly recognize the importance of their digital capabilities driven by our solutions and wanted to solidify the partnership with an extended contract duration.
Gross margin for the first quarter was 52, 6% down from 53, 1% in the first quarter of 2020.
And up from 48, 3% in Q4 of 2020.
As a reminder, in the fourth quarter of 2020, we had a combined impact of approximately 370 basis points to our stated gross margin.
Resulting from an accounting adjustment and contract asset impairment, which negatively impacted the prior quarter's gross margin results.
Year over year decline in gross margin was primarily attributable to expenses associated with incremental implementation resources delivering customer go lives.
Absent the negative impact from the prior quarter the sequential improvement in gross margin was primarily a result of the continued growth and higher margin subscription revenue generated from new customer go lives.
Total operating expenses in the first quarter were $54 9 million or.
Or 46, 9% of revenue compared to $52 8 million or <unk> 56, 3% of revenue in the first quarter of 2020.
And $50 1 million.
Or 45, 7% of revenue in Q4 of 2020.
The year over year reduction in Opex as a percentage of revenue as an example of our ability to increase efficiencies across the organization and scale of our operating expenses below the rate of revenue growth the category of Opex that exhibited the most pronounced growth year over year was R&D as we continue to focus on investing in our products.
And capabilities to deliver these solutions to our customers in an accelerated manner.
The sequential increase in Opex was driven by incremental head count.
On board of during the quarter.
In addition to increased payroll taxes associated with the timing of annual bonus Commission payments and restricted Scott stock unit and market stock unit vesting.
Adjusted EBITDA was $9 9 million up from a loss of $100000 in the first quarter of 2020.
And of positive $6 $1 million in the previous quarter.
The year over year increase was largely attributable to an increased mix of higher margin subscription revenue and effective scaling of operating expenses the.
The sequential increase was attributable to the negative impact from the accounting adjustment and contract asset impairment realized in the fourth quarter of 2020.
We ended the quarter with cash cash equivalents of investments of $528 $6 million down from $539 1 million at the end of the fourth quarter 2020.
Cash flow used in operations for the first quarter was $5 $5 million.
Driven largely by the timing of our annual bonus payout.
Strictly stock unit and market stock unit vesting.
And the related payroll taxes.
We incurred net capital expenditures of $6 $1 million and generated negative free cash flow in the quarter of $12 $4 million.
Now, let me wrap up by sharing our second quarter and updated full year guidance.
We forecast second quarter non-GAAP revenue in the range of 122 million to $123 $5 million representing year over year growth of 23% to 25%.
And full year revenue in the range of 495 million to $498 million.
Representing year over year growth of 22%.
We forecast second quarter, adjusted EBITDA of $8 5 million to $9 1 million.
And full year 2021, adjusted EBITDA of $32 million to $34 million.
This guidance includes the expected contribution of quick switch, which was acquired on April one.
In fiscal 2021, we anticipate quick switch revenue contribution to be low to mid single digit millions of dollars.
And an adjusted EBITDA loss of low to mid single digit millions of dollars.
Recognized relatively ratably over the next three quarters.
In closing we continue to be encouraged by the market activity customer receptivity of our solutions and the associated financial benefits.
We feel we're continuing to build a broad and diverse base of revenue with meaningful operating leverage which supports continued accretive growth going forward.
And with that I'll turn the call back over to Matt for his closing remarks.
Thanks, David and closing we had a great start to the year on the first quarter from a sales perspective, we saw steady sequential improvement on the deal activity, which I take as an indication of an improving buying environment.
When you look at the breadth of wins, we had across our teams I believe it's clear that we are well positioned to enable broad based digital transformation for banks credit unions in Fintech, we continued to innovate and deepen our solution set we released key enhancements to our banking as a service offerings supported by the launch of a major client program and we couldnt be happy.
Pierre to add the click switch product and team the Q2.
And we continue to operate the business at a high level in a remote environment, where the supporting record digital usage, while continuing to deliver new products to our customers rapidly I am encouraged by the momentum we're seeing across our business our growing pipeline improvements on the macroeconomic environment and on our pace of innovation put us on a great position to continue.
Executing our strategy through 'twenty one of beyond.
And with that I'll turn it over to the operator for questions.
At this time, if you'd like to ask the question. We ask that you press star one on your telephone keypad.
And we do ask that you limit yourself to one question only.
Our first question comes from the line of Tom Roderick with Stifel. Go ahead. Please your line is open.
Hi, David Hi, everybody.
Thanks for taking my questions great job on the quarter and really nice to hear about the particularly the net new bookings side coming back and I think I think that I'll start with that side of the equation in my question.
Would love to hear a little bit more as it seems like the world is reopening and banks are engaging a little bit more.
What is the tip of the spear now there's so much to choose from relative to a much broader portfolio. When we think about onboarding and banking as a service on lending and lending analytics.
Is is this no longer a case, where we're the.
The core sales team and to try to lead with digital banking when youre going after sort of the net new logo and understanding net new logos, often come with displacing something talked a little bit more about that process of what youre seeing with the net new logo of push whether it's new products, where theres not as much competition or is it still largely coming.
The tip of the spirit of digital banking and then adding on from there.
The Tom Thanks for the question.
For the.
On the most part what we're trying to do and this is a little bit sigh of correlated the size as well, but we start talking to.
Relationships in a lot of account intelligence all of these accounts that we work with them. So we started talking with them about their digital strategy, whether they are looking at we've got to move to different sides of the house, whether it's commercial retail and then we start to show our products to them.
And it typically leads to theyre interested in one of the solutions at least that we have it could be digital banking it could be lending it could be the sales and pricing on coaching tools and so when we start there what we the.
Found us.
It evolves into the into more and more conversation. So if you think about the example of the the $50 billion of bank. They bought our corporate and 19. They went live in 'twenty. During the process. We built the treasury on boarding tool with them. They also wanted to add precision lender. So we were all of the precision lender and the corporate banking with the <unk>.
With them in the very beginning but they work through the process of the tip of the spear with corporate there. So it's nice to have so many different solutions that.
That sort of so many problems for these customers and if you look at the quarter that we had it highlights.
Just the breadth of the products that we have we talked about credit unions that went with us for a retail product for our retail digital banking solution winning at the best of breed. When like there. Then you also have the broad based wins like the $8 billion bank that bought the entire suite and the of the lending solution. So it's nice to have so many options right now to be able to share with the.
Customer, but where we're starting with the strategic conversation with the executives of the bank of the credit unions of the Fintech to talk about where they want to go and then we can kind of fill in all of the bikes form. So it's we're not leading with any one in particular, we're kind of listened to the cross back and find out what problems, they're trying to solve and the beauty is we have a solution for what the.
The majority of them are concerned about right now.
Yeah, and I think that maybe the follow on part of that question would simply be sort of of the bottleneck of implementation. It's hard to implement certain degree win win win bodies can't get on sites I know you've done a great job from remote implementation, but.
New logos come online I would gather the tend to be slightly longer implementation, making the type of revenue a little longer.
Tell us a little bit more about how youre handling staffing up bracing for that then and and preparing on the implementation side such that we could see a little bit faster time to revenue for 2020, I understand we had some headwinds.
Yes, Tom and you bid on the story of a long time, I think that that indigestion that occurs when you're a smaller company and trying to build scale and you don't really have demand and capacity planning impacts you defer.
Differently, and we see that a lot from the competition.
<unk> for us, though the demand capacity planning between our delivery organization of our sales organization of our finance organization and our HR organization is locked in now so we look at the pipeline look at the certainty of the deal is going to close make sure we have staffing the carry that.
Those opportunities now also remember the precision lender, we get that thing up and running in 90 days. It's an amazing experience are you not really replacing a legacy tech.
It's cleaning it gets up and running quickly on a digital banking as you know the if youre doing small business and corporate and consumer that's a 12 month process for one of the tier one deals and we were able to deliver that remotely last year I think I highlighted in the fourth quarter that we delivered two of the largest banks in the history of the <unk>.
In a two week period.
And we're very successful and we did most of it remotely so.
We will share with you is the pipeline picks up what expenses are going to come along if we have to start the out get the coverage of little bit will just add the resources to deliver it because it's the long term value of these customers that we have so.
I don't really have an excuse the we're having trouble deliver on the software or.
The.
We're going to have to add a bunch of people. It's just will be very transparent with the investors and share what's what's happening in on this.
The pipeline picks up I think youre going to see back half of this year of lot of volume coming through the pipe and we're excited about it but we'll be prepared for it as well.
That's great great guidance I'll jump back in Q. Thanks, Matt.
Our next question comes from the line of Sterling Auty with Jpmorgan go ahead. Please of your line is open.
Yeah. Thanks, Hi, guys. So lot of good explanation, there, but I guess I wanted the fine point with my one question to understand why now is the.
The improving net interest margin at your customers or something else debt, increasing the demand now.
So I think it's just a function of youre seeing.
After the pandemic people coming out the stimulus program Pvp are starting to fade a little bit of businesses are needing to get back up and running they need to get lines of credit consumers. I think we have two trillion dollars of savings accounts right now so there is.
On the activity of the demand and then also coming off of a year, where you realize it's a lot easier for your customers for the customer and for you for them to deposit a check of the mobile phone or for them to approve of wire, where they are working at home from.
With our single platform. So it's a matter of when we saw what happened last year, we were able to work remotely they had to work remotely and they want to capitalize on it I will say.
Debt the pipelines like pipeline activity and demos are up 30%, but.
Temper that a little bit I have not seen an acceleration in decision, making which is what I'm, hoping for on the back half or as we move into 'twenty two but all of the conversations that are happening. If you remember Q1, I said that the tier one pipeline is back and now it's about closing it we got one closed in the first quarter and we hope that momentum continues on throughout the year, but.
The the the realization that this is here I think there is in the technology refresh theres going be a lot of names of change hands over the next couple of years and we want to be obviously in the middle of as many of the deals as we can be.
Thank you.
Thanks Dara.
Our next question comes from the line of Terry Tillman with true of Securities Go ahead. Please your line is open.
Yes, Thanks for taking my questions, Hi, Matt and David Thanks for all of the color and I'll Echo the prior prior comments on the net new bookings picking up.
I guess on it on two part question of on quick Rich I don't know if this was if we're going to see this I assume it would be in the Q.
But I guess, that's in the second quarter, but so like maybe you can help us on what did you actually pay per click switch and then the second part of the question is I'm, assuming quick switch does kind of all net treasury on boarding and digital account opening kind of segment. If there is the way to kind of look at it that way and how do you see the growth prospects on the product line quick switch on that product family versus.
Your core the banking products sort of the lending product I'm, just trying to gauge whats.
The excitement you see what the acquisition. Thank you.
Hey, Terry Good morning, I will give you some of the the information that's going to be dropping with the filing over the next few days the approximate price that we pay per click switch of $65 million, including fees.
The time I think it's a really really good fat and should be of great Cross sell product for you as well.
My question on the the the I mean, I guess the bass in the marketplace businesses I mean bass it seems like the main credit Karma obviously.
Right client then is that the top 10 client that you didn't mentioned by name in the press release and and just you know.
Maybe some if you can give us a little bit on the the size of the opportunity for the bass business.
And then is that tied into the marketplace of business hours marketplace doing.
Yeah. So.
Credit Grandma is adopting the client that we reference.
The Reds launching a program of academic the debit card as in many ways use of meaningful of the net new win for us.
The company and they started when the savings account and then they moved to the checking account with the debit card associated with it it becomes extremely meaningful and what we're trying to do is.
Provide color because it's a different type of business and things are gonna become more transactional in that business because they are tired of the debit card and so when we have clients like just to go live it's important for us to articulate the importance of of this of the different than the digital banking client will you have a minimum and then you begin to build on the minimum.
So the size of this client is more in line with what it with one of tier one bag on the digital banking side would be with a tremendous amount of upside on top of that as far as the the opportunity with the banking of the service.
Speak more globally around what's happening right now embedded finance.
And becoming a bigger deal on multiple industries not just in Fintech, but you have insurance companies.
Healthcare places where you have.
People that want to begin to provide banking services to their customers and there's a lot of activity that we're getting out of those that group of people. So very bullish on at the time, we haven't between one and $2 billion, but I think that's pretty Conservatives as we typically are with the.
Good to see the pick up on the net new sales strength, but it's also great to see the continued execution on the cross sell side as well.
I'm wondering can you talk a little bit about the execution there.
Is it is at the front of it is obviously, having more products to sell but has anything changed with the go to market strategy as it relates to cross selling if you think about having more products to sell that it seems like you.
There could be some optimization in terms of cross selling is the portfolio.
The portfolio gets a little bit broader but anything on just.
Whats driving the cross selling Q execution the the.
The go to market strategy, there would be helpful.
Yes.
Yeah. Thanks, Andrew for US, it's really been of focus with our customers on engagement level of him engaging with more customers than I ever have the rest of the leadership team is we're really driving strategic conversations about digital transformation and when we square off with our customers now.
You always say this but there's a tremendous amount of attention goes to listening on what problems, they're trying to solve because if we're listening appropriately we can drive many of the different products and if you look at the quarter on and you are talking of $10 billion Bank Treasurer.
Treasury the Treasury Onboarding of 6 billion of our bank took digital.
Count opening yet to the top 25 of the top 50 on precision lender and if I sit and think about what that translates to for us of the company is we have a thousand kind of more than 1000 customers live on our products, we have more than 150 customers with more than $5 billion on assets and we have more than 85 with more than 10 Bill.
So our expansion opportunity with our product suite is tremendous and it represents a huge upside for us in the energy and effort that we're putting into understanding our clients with the counter intelligence, who they are what they want when they needed by what they want from a roadmap perspective, tying that back into product and how we develop it.
Just sets up for a really nice place to be and rather than relying on a net new every single quarter to drive it. So it's a focus on alignment I'm committed to trying to expand as far as we can the all of our customers bigger small and I think the.
Your office network. So there's all of those behaviors deposit the check because you Couldnt go to of branch opening originate alone because they.
They couldnt meet with you on person. So you had a variety of loan applications online.
All of those things are what people have started to do and I don't I just don't I mean, we're not going back the rent movies from blockbuster. So I don't think were going to go back to the deposit and checks of the bank once you've done it once you've done it digitally so those behaviors or have become habits and how we want to do things in those numbers are off the charts I gave some numbers out I think at the end of.
The last year around remote deposit capture but the numbers in the the number of checks deposited in the amount of the positive.
Was off the charts on growth and then you look at.
The.
The engagement around logins I think we're at more than $4 billion in 2020, and we will see more than that.
In 'twenty one obviously some of these are habits that are now part of our life and they are not going to go back.
Against it and so what we're trying to do now that would take that engagement what does the customer doing and give it back to the bank the credit Union of the Fintech. So they can undertake this data and understand what are the next best product of what's the service that I can provide by account holder. So that I can deepen my relationship and grow my business and so I have a lot of confidence.
In the that's going to be of sustaining habit of people on I think it is.
The tailwind of the business and it's why we're so passionate about what's what's ahead of us the head for us.
Really interesting picks up.
Thanks, Jeff.
Our next question comes from the line of Matt Vanvliet with <unk> go ahead. Please your line is open.
And thanks for taking the question guys and congrats on the quarter I guess somewhat on the last question and some of the others earlier, but on the.
The sales the sales team organizational structure overall.
You feel like you need to.
Having some more specialization.
Across the different product lines.
A lot of success on the cross selling but how are.
Are you running into a big enough opportunity anywhere.
Where you need to maybe structure out the sales teams a little bit.
And then secondarily on on the lending business as a whole on it seems like traction is coming back to your comments, but.
One of your projections for sort of total loan volume as you look ahead and how much that will drive demand versus just wanting to move things more digitally.
Yes.
Matt Good to talk to you it's been around the edge on the call.
Sales structure.
The asset if you think about the products as we put them together and we go square off with our customers.
It depends on the tier where youre going to start the tier ones, we are beginning to.
Coalesce around a broader account team that goes out to those customers tier two tier three of its a little more.
Geographic and product centric, but one of the things that we did is we put our solutions consulting organization within our office of the strategy office of strategy and so now they are very close to the product the strategy, how we go to market and so we are.
Specializing but we're also making sure that we are educating the people on how these products come together on what they mean to our.
The potential prospects of customer that we're talking with so there's <unk>.
Obviously, an evolution thats going to occur of the sales organization and the relationship management organization, but thats can be on a tier by tier basis, and we'll continue to update you on those I don't have any.
Big structural changes, obviously, we had a really good first quarter and I like the momentum coming into the second and in the back half of the year sort of I don't want to if it does not.
I don't want to fix the necessarily but there was some slight modifications will make throughout the year and then.
Just continue to.
Best in that group on the lending side I don't have.
Lending volumes on my end I will just tell you that.
The activity that we're seeing the discussions around with our customers, they're getting back to the lending out money and not government money, but for small business loans and lines of credits of <unk>.
Theres, just a lot of energy around that that business right now on our ability to automate it within the digital banking experience, where you take data from our customer use that the pre populate.
Applications of information so that you can make it easier from a customer to open a loan plus with the pricing tools and the data we can use from the more than $3 trillion dollars of loans, we price last year.
It is very informative and Thats why I think youre seeing precision lender grow youre seeing the activity on cash.
Cloud lending out there with.
A very large auto manufacturer of that jumped in to use the application to help the.
The leasing autos, so theres a lot of activity in the economy and the economy the revolving around lending and we're just kind of really good spot whether it's on the banking finance or the credit inside of the business.
On a wonderful thank you.
Thanks, Matt appreciate it.
Our next question comes from the line of Michael Del Grosso with Compass Point go ahead. Please your line is open.
Good morning, Thanks for taking my question.
Come on of a multi part question actually but the first is and I apologize if I missed this earlier, but overall commentary as well on what youre seeing as far as the international demand whether its precision lender in Europe for bass in Australia in APAC.
And then the follow up is on clicks, which specifically super interesting product.
Particularly given the very large opportunity as it relates to the bank account portability.
And I would think specifically in Europe as well.
How do you see the opportunity longer term.
By geography.
Between I guess, the U S and Europe longer term.
So on the international side Europe.
Seems to be picking up keep in mind internationally, the only price, we roll out our cloud lending and precision lender.
I think precision lender on.
On the banking side is picking up some activity in Europe as I said earlier I expect to have.
I hope to have some wind in the back half of this year and Europe Asia is kind of steady Eddie on the all finance side with the cloud lending I think we could potentially have of precision lender deal in the back half of 'twenty, one with precision lender, but I wouldnt necessarily commit to that yet, but we are getting some good traction with some bigger players out there of clicks, which as far as.
Right now it's of North American product and we have more than we can say grace over remember it.
The.
Yes.
Yes, 50 person shop that was trying to build their business of what we're doing is dropping them into our business with hundreds of salespeople that are going to be telling the story and we want to make sure we get the delivery right.
Raving fans of the product with the integrated into our digital acquisition product of wells on digital banking products. So before we take at international I think it's kind of we need to.
Make sure we can scale it here in North America, and I think thats of two to three year window. We may look at doing something in the and talking with our clients over overseas, but it's a little tough right now to do that with travel restrictions and everything else, but that's probably the report back on later.
We're excited about the click switch technology as I said, our customers prospects and sales and relationship management teams of as well.
Okay understood. So just the.
Kind of recap on that though clicks, which the the change the guidance on.
All of their anticipated impact on guidance, all North America U S. No international.
I'm not sure of that yet.
Right Michael.
Great. Thanks, guys.
Hi, Thanks have a great day.
And again as a reminder to ask the question. Please press star one on your telephone keypad. Our next question comes from the line of Arvind around <unk> with Piper Sandler go ahead. Please your line is open.
Hi, Thanks for taking my question.
So just wanted to ask all of the.
Of the competitive environment.
So the thinking of it.
Prior to then price of the.
They haven't been as set of competitive on the on the digital front and the new had some.
The newer players are still kind of scale up.
Can you just kind of comment on the overall competitive environment and.
And sort of your win rates.
The are you seeing now relative to commodity 18 months ago.
The.
The competitive market is the same for us at the same the group just depending on whether it's lending or digital acquisition or retail on the banking or business banking. So.
Pfizer of Fas as far as on a still compete like al the win every deal they can and sort of the Jack Henry and the rest of of our win rates are holding steady debt and the tears matter a little bit but on the tier one space, we're still of 50%.
And then in the tier two tier three depending on the size of the around that number so.
We're still very competitive with the folks that are out there but.
Sometimes the drug you've got the target on your back but feel good about where we ought to feel good about the pipeline and our ability to execute against that over the next.
Over the foreseeable future.
Perfect. Thank you.
Thanks to all of them.
Our next question comes from the line of Joseph <unk> with Canaccord go ahead. Please your line is open.
Hey, guys good morning.
Back on <unk>.
Yes.
Circling back on that.
Who can talk a little bit more about what the credit karma with the.
Per your competitive profile. There I think you mentioned you added some new product line smell it might've been debit.
The just go into a little more detail on what that extra cash.
Capability added was per credit Karma, and what that impact may be.
Relative to the move forward strategy with the expanded functions.
Yes, Thanks Joseph.
The credit Karma was gracious enough to allow us to use their name there is some sensitivity from both of US on in this very competitive environment around what the features and functions are I think what's important about it is is the large customers like credit Karma and other.
Tier one bass customers give us tremendous insight into innovation, and where we need to go and they're really helping us build out this highly differentiated roadmap so very happy with.
That.
That go on that rollout you get a ton of credibility. So it's no different than on the banking side, when you rollout of big customer in the up and running the.
Other prospects look at that and say okay. These guys can scale on the handle that.
On the credit Karma has been of great partner, we are very happy with.
With the relationship of our didn't continue investing I did want to clarify the debit is not new for us or the other feature debit or the new product that they rolled out on top of the savings accounts.
But the volumes that we're seeing a tremendous success. They are masters of marketing and we've been really happy with the rollout I think we're beginning to see other people that are taking notice and reaching out to us to engage in what our solutions are on what the opportunity to work with us sort of like so.
The very positive very hard to do.
I feel like we're in a really good spot on the back side of the business. It's just about execution and making sure that we're getting in front of everybody. That's looking at doing these deals.
Great appreciate it thanks for that.
Thanks, Joseph the day.
And our next question comes from the line of Steve <unk> with G. Research go ahead. Please your line is open.
Hey, good morning, maybe.
Maybe just wanted to ask about essentially the click switch still within the context of Q2's feature acquisition strategy. So maybe just sort of commentary on what made quick switch of an attractive deal for Q2 and sort of.
What what how those characteristics play out in future deals. Thanks.
Yes, I do want to make sure that like one of the things that's unique about clicks, which for US is it's really the first acquisition, we've done or product that we built that crosses both fintech banking and credit Union. So this product can be sold by all of our sales force to all of our customers.
That was one of the things of those unique about it for me.
The founder of Kale.
Known each other for a long time when he started the business. He was passionate and trying to figure. It all out we had talked at one point, but it was too early and what are you. What he has done is EBIT is a great culture. He built the great product and built the great client list and so we've seen them execute we like the team we like the products, we think and I think that debt.
They obviously have plenty of options.
As far as to go to different places, but culturally we aligned and then where we are from a product perspective, I think it allowed him to fulfill.
And fulfill what admission was which is to become the premier switching product and to help consumers move to different relationships and be portable so for.
For us, it's really about helping our customers engage and be more profitable with their clients on that to drive more adoption and the people move off of <unk>.
The legacy bank to the.
The new next generation banks that we're working on those so it's a great fit for US I'm excited about is the team is excited about it and I think.
We've gotten pretty good at these acquisitions of I think it's going to be probably one of the quickest the jump in the pipeline the start to have an impact for us.
Thank you. Thank you very much.
There are no further questions at this time I would like to turn the call back over to Matt Flake.
Yes, thanks, everybody.
I also wanted to point out that we released our first ESG report this morning and highlights of the company.
Hello companies addressing ESG priorities for employees customers and partners. It is a very meaningful document to this company and I think it's a roadmap for how we're viewing the future and where we're going sort of encourage you to go read the ESG document that we reported that we put out on very proud of the work that the team did to put that together and I'm proud of the company.
We've become and what we will be as well. So thanks, everybody for your diamond that'll be of a great week.
This concludes today's conference call you may now disconnect.
Okay.
Okay.
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Yes.
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